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Jun 16, 2011

Foreign ownership of Aussie land: the peril of selling the farm

Foreign government-backed companies have begun buying up farmland around the world, with Australia’s vast tracts of top quality primary production land a prime target.

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With the world’s population set to hit 7 billion later this year – and 10 billion by the end of the century – top quality agricultural land has never been more valuable.

Perhaps it’s with an eye for a good investment opportunity or, as some concerned observers believe, to protect against any potential future food shortages, but government-backed companies have begun buying up farmland around the world, with Australia’s vast tracts of top quality primary production land a prime target.

Qatar-based Hassad Foods has been a major player in the big local farmland buy-up. Backed by the Qatar Investment Authority, the company has invested more than $60 million in prime Australian sheep grazing land in the past year, with more properties in the company’s sights. As well as prized Kaladbro Estate in western Victoria and Queensland’s Clover Downs, Hassad’s burgeoning portfolio also includes 6800 hectares of sheep grazing land in Canowindra in New South Wales.

And they’re continuing to look to add to their string of acquisitions. Last week The Weekly Times reported Hassad were poised to snap up a further 8500 hectares of land in Victoria’s western district in a deal worth $35 million — about 20% above market price.

Meanwhile, China state-owned conglomerate Bright Foods has also been hungrily looking to acquire local agribusinesses because of the favourable local environment for overseas investors. The Shanghai-controlled company have reported to be interested in Foster’s wine division, while last year they made a failed $1.7 billion tilt for sugar producer CSR. The company has also signed a memorandum of understanding with the NSW government to explore local wine, diary and sugar investment opportunities.

In the south-east of Australia, Brazilian beef giant JBS has been busy buying up abattoirs and meatworks, while Singapore-based Olam International now control almost 45% of Australian almonds — thanks to its purchase of Timbercorp and its 8096-hectare plantation.

Crikey has begun mapping the recent purchases of prime Australian farmland by overseas interests (click the image to view the map)

Ausbuy CEO Lynne Wilkinson says the issue of food security is paramount to the rest of the world and should also be to Australia.

She says there have been many recent instances, including the sale of over 100,000 hectares of farmland in Western Australia to the Arab States, which show the Foreign Investment Review Board (FIRB) and the ACCC are not looking after Australia’s long term security interests.

“When countries buy our land it raises issues of sovereign risk, and in our grab for cash we lose the intellectual property of generations of Australian farmers,” she told Crikey. “We cannot guarantee the food grown on this land will stay in Australia or that the profits from exports will be here.”

Entrepreneur Dick Smith says he has “no doubt” there has been an increase in foreign-controlled companies buying up local agricultural properties. Smith has recently been advocated a push to a more sustainable level of economic growth.

“What people don’t realise is that if someone buys prime agricultural land, we can’t force them to sell us the food from that land,” he told Crikey. “They can ship the food form the land directly to their country and I think that should be looked at.”

Hassad chairman Nasser Mohamed Al Hajri has previously tried to allay fears that his company is setting oil-rich Qatar up for any future food shortages. But that hasn’t stopped the United Nations expressing concerns over foreign multinationals buying up swathes of farmland.

Independent SA senator Nick Xenophon is worried that corporations who aren’t state-owned but are “effectively arms of foreign governments” are going under under the radar in purchasing farmland. Under FIRB rules, state-owned companies must get approval for any local investment.

“If these foreign governments are planning how they are going to feed their people in the future, surely the Australian government should also been considering this issue more seriously,” he told Crikey. “We should be selling the food, not the farm.”

Because the sale of agricultural land in Australia is exempt under Foreign Investment Review Board (FIRB) regulations, there is rarely much attention given to the overseas purchases of farmland unless the purchase of assets exceeds the $231 million threshold.

This means that there is no central source of data on just who owns what farmland — and what country they represent.

That’s something Shadow Minister for Agriculture and Food Security John Cobb hopes will change with the passing of a motion in parliament earlier this year, which will see the Australian Bureau of Statistics (ABS) collate a list of direct foreign ownership of agricultural land, water rights and businesses for the first time.

“This motion gives parliament the information needed for sensible safeguards. It will ensure the future of Australia’s food security and economic interests as they relate to foreign ownership,” said Cobb at the time.

Nationals leader Senator Barnaby Joyce believes the motion is a good step towards understanding the level of overseas investment in Australian agribusiness: “I think you should always take the temperature before you make the prescription,” he told Crikey.

But Joyce also thinks more needs to be done to protect local food security. He says if overseas investment continues unabated a situation could arise where food prices become more expensive.

“These countries are treasuring something that perhaps we don’t, because they know what it’s like to be hungry,” he said. “To be honest, we can build another Sydney Opera House but we can’t build more primary agricultural land once it’s gone.”

Dick Smith agrees, but doesn’t think any political party will do anything about because of the economic advantages of foreign investment: “I think we should just say any land that produces food should not be sold to overseas interests,” he said. “To end up with large amounts of foreign ownership of farm land when there will undoubtedly be food shortages is unsustainable.”

*Additional research by Crikey intern Iona Salter

**Are you a farmer who has recently been propositioned by an overseas conglomerate? Or have you already sold the farm? You can email us with your story at boss@crikey.com.au or alternatively via our anonymous tip offs section.

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32 comments

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32 thoughts on “Foreign ownership of Aussie land: the peril of selling the farm

  1. stephen martin

    Not mentioned here as it specific to Australia, is the large scale buy up of arable land in Africa by China.

  2. Liz45

    The question needs to be asked? As the ALP Govt has only been in operation for 3 full years, why wasn’t something done during the almost 12 years of the Howard Govt.? How long has this been going on for? How is the ‘ordinary’ person to know about this? I’ve heard ‘whispers’ from time to time via TV and newspapers, but I don’t think we’re as informed as we should be. Do other countries allow such purchases in their countries? I suspect not!

    Between the mining companies having their eyes on so much land for either CSG or coal, the impact on agricultural land in operation now is in possible danger, let alone land that is not used for agricultural purposes at this stage. I find this situation to be quite alarming. We have enough of our country owned by foreign individuals or companies – I think the Laws should be tightened re overseas people buying land or property in housing areas too. I think both State and Federal Govts have been very slack in this regard. The areas on the map look like a lot of country to me?

  3. Sexual Lobster

    Hypothetically we could end up with a situation in several decades time where Australians pay considerably more for food than we do now, but millions of people in countries such as Qatar have enough food to survive that otherwise might not. Is this so bad?

  4. Gavin Moodie

    I have yet to understand what the problem is here. 20 years ago there was a panic about Japanese buying up the Gold Coast but 50 years ago there could have been a similar panic about the Brits buying up the farm – if this weren’t covert racism.

    In general foreign direct investment in the economy is beneficial. Blocking foreigners buying farmland would depress the price of farmland, which of course Aussie farmers would altruistically accept as a contribution to salving their confected panic over food security.

  5. Son of foro

    “I have yet to understand what the problem is here.”

    A basic glance at Irish history might help here.

  6. Gavin Moodie

    I understand even less how Irish history may be relevant. Australia hasn’t depended for food on subsistence or even peasant agriculture for over a century.

  7. mikeb

    The question will be whether Australians will have to pay a significantly higher price for Australian grown food in the future. Assume that farming remains Australian owned and Qatar said “I’ll buy your wheat for $100 tonne” when the going rate in Oz is $80. What farmer would not take the higher bid? What difference does it make if the farm is foreign owned unless the owner cuts Australian consumers out of the market – and in this latter scenario what’s to stop the Aust Govt natonalising farms if there was a crisis? There may be constitutional problems with this but i’m sure if there was a crisis then …..

  8. Liz45

    I was surprised to learn the small amount of Aussie land that is used for agriculture. I can’t recall what it is, but I do remember thinking it wasn’t very big? Can we buy land in China or Japan? Or anywhere else? The US for instance?

    Isn’t Qatar filthy rich? Is this the country that got the gong for the Soccer World Cup in 2021 or so?

  9. Jackol

    Ultimately this is a non-issue ; if it ever did come down to Australians really going hungry while locally grown food was being exported because of foreign ownership of Australian agricultural land, sovereign risk be darned – it would be nationalised/regulated for local consumption faster than you could say boo. The land isn’t going anywhere.

    The vastly more important concern is the stupidity that is urban sprawl paving over the best agricultural land in the country around Sydney and other centres just because we can’t get urban planning priorities even remotely right.

  10. Gavin Moodie

    @Jackol

    I agree that this is a non issue unless it is another manifestation of that apparently multiheaded monster of xenophobia.

    However, I think Son of Foro’s point is that even if the land is in your country a foreign imperialist power may force the spuds or whatever to be repatriated.

  11. Hugh (Charlie) McColl

    Liz45, what did you mean by: “I was surprised to learn the small amount of Aussie land that is used for agriculture.”? Outside of towns and state land like national parks, most land is used for “agricultural purposes”. From 5 acre hobby farms to million acre pastoral stations growing beef for Indonesian slaughter, this adds up to a huge proportion of the Australian continent.
    I don’t think it’s a question of whether we (us individuals) can buy land in China or Japan or if we want to. It’s about whether Australians can invest in foreign or local corporations which can own land in other parts of the world. The answer is yes. If we can do that then so can they. Corporations don’t really have a nationality (witness all the tax havens) and their shareholders can come from just about anywhere. Like, who ‘owns’ BHP or Telstra? And what nationality is Wagyu beef?

  12. Son of foro

    Hi G Moodie

    Yeah, that was the point, more that it triggers that sort of fear rather than any imminent reality. I should probably point out here that I’m not losing too much sleep over the prospect of the Qataris turing the great wheatbelt of WA into a giant air conditioned soccer ground.

  13. james fraser

    having been born in a rural community we think that it is totally unbecoming of the policies that are in place to promote investment from other countries into our agricultural stability.this goes against everything that AUSTRALIA STANDS FOR AND THE PEOPLE WHO LIVE HERE AND HAVE DEVELOPED THE MOST COST EFFICIENT FARM PRACTICES IN THE WORLD.WHY GIVE THIS TO FOREIGNERS AND SELL AUSTRALIA TO PEOPLE WHO CANNOT BE TRUSTED TO PRESERVE OUR SOVREIGN RIGHTS?

  14. Liz45

    @HUGH – I don’t know how much land in total is used for agriculture, but I remember when I heard it that I thought it wasn’t much considering the land mass of the country. However, I’m more than prepared to admit I could be wrong. Perhaps it was NSW or ???

    If we can own land in other countries, than I’m wrong!So, the fact that a lot of property in Sydney is being purchased by overseas people isn’t a problem then?

  15. AR

    Foro & Gavin – just to be accurate, during the Irish famine (1845-47) the problem was the potato blight which destroyed the ONLY staple food of 8M people. The other commodities weren’t affected and the peasants starved as wheat, barley ,oats & meat were shipped to Britain.
    And (surviving) Irish were shipped to America, mainly. It was, and remains, the only country in which the population halved in a decade and still remains lower than a 170 years ago, despite the highest birthrate in Europe.

  16. nicolino

    We can all sleep securely in the knowledge the ACCC and the FIRB are (not) looking after Australia’s interests. I another time and place that would be treason.

  17. Hugh (Charlie) McColl

    So I suppose that if Australians are happy to sell their land to anyone who’ll buy it, even foreigners, then that’s alright, that’s democracy. It’s only money. Is that what’s happening here?
    Australian businesses, worth more than such and such, can’t be sold to foreigners without FIRB oversight. But land can? Hmmmm.

  18. Gavin Moodie

    Off the top of my head there are 3 arguments in favour of the free trade in goods, services, land and other capital, which includes allowing foreigners to buy Australian land.

    It has very considerable economic benefits. Both the country that imports goods, etc including capital and the exporting country benefit economically. There is a strong theoretical rationale which has been supported by empirical studies.

    It is fair. If Australians are allowed to buy land in foreign countries foreigners should be allowed to buy land in Australia.

    Australia needs foreign investment to continue expanding economically as fast as it is currently expanding. Until recently Australians haven’t saved money, and even if they did save as much as the Japanese, for example, there aren’t enough Australians to invest in all of the projects Australians want to advance. Without foreign investment Australia would have to choose between building mines, building the rail lines to transport minerals to the coast, building the ports to ship the minerals, building factories, improving irrigation and other agricultural infrastructure, and building the social and other infrastructure that the community needs.

    It would be possible, I suppose, to say that foreigners can buy mines, railways and ports but not farmland. That would reduce the amount of funds available to invest in Australian agriculture which would depress the value of farmland and result in under investment in agriculture. That in turn would mean that Australian agriculture would fall behind agriculture in other countries which had optimal levels of investment. In short, it would distort economic activity away from agriculture and towards other activities that weren’t so penalised.

  19. no_party_preferred

    I don’t know what’s worse, That’s its happening or the amount of people that don’t give a shyt.

    The foreign ownership of agricultural land is a problem to farmers now in that it drives the price of agricultural land up to the point that unless you inherrit a farm otr have a buttload of money, there is no real way you can get onto property. Its pretty short sighted, and speculative to say that “oh well if it becomes a problem, we’ll nationalise it” we tend to lean the other way and privatise thinkgs that were nationalised. Name something that’s been nationalised recently

  20. Gavin Moodie

    Telecommunications: that is exactly what the national broadband network does and why the right hates it so much. Going back 30 years health insurance: Medibank.

  21. Gavin Moodie

    Miners work for generations in a mine but no one suggests that they should be able to buy their own mine. No one imagines that fourth generation factory workers should be able to buy their own factory. Restaurant workers aren’t expected to be able to buy their own restaurant and who would argue that taxi drivers should be able to buy their own taxi? So I don’t understand why farmers feel they should be able to buy their own farm, especially since farming is so capital intensive.

  22. Jackol

    No_party_preferred:
    My point was a lot of the hysteria around ‘food security’ throws up arguments that ‘we have to ensure food security by having agricultural land in Aussie hands otherwise we may end up shipping food overseas while Australians starve!’. That’s a nonsense argument – the minute that Australians are genuinely in danger of having insufficient food available, the concept of ‘foreign ownership’ will be ditched regardless of any ‘sovereign risk’ concerns. Our food security (as a significant food exporter) is basically assured – unless climate change really comes back to bite us of course, or if we lay concrete over all our fertile land to build McMansions.

    Gavin Moodie makes the comment that “a foreign imperialist power may force the spuds or whatever to be repatriated”, but in the event that the brown stuff really hits the fan in a global sense hard power is going to be used regardless of whether we have land titles or business contracts in place – whether we stand or fall in those end-of-the-world scenarios falls squarely on our military capacity and alliances.

    Anything short of a breakdown in the existing world order makes foreign ownership a moot point – food prices will go up whether or not the farms are locally owned or not, and Australians are going to pay the global market price for food regardless of farm ownership.

  23. Sir Lunchalot

    This is disgraceful and Governments sleep through it. Gillard take action NOW.

    We can’t buy land in some countr

  24. no_party_preferred

    Gavin, ridiculous comparisons between industry and agriculture. And many taxi drivers do own their own taxis.

    Productive farms come in all sizes from 5acres intensive herb farms to 3000 sq km grazing stations. Comparing them to mines and factories is just plain stupid and ignorant.

    Having them all or primarily in the hands of multi national corporations is a disasterous outcaome for Australia.

  25. Gavin Moodie

    Why is having farms owned by foreigners any more ‘disastrous’ than having factories that produce Australia’s penicillin owned by foreigners?

  26. Harvey Tarvydas

    Dr Harvey M Tarvydas

    Great article Tom Cowie, top info.

    I am with LIZ45 but want to come at it from a ‘higher’ level or more sophisticated attitude and am not saying that the current activity shouldn’t be allowed but that if we were smarter and our Governments (like theirs) were feeling a responsibility to encourage maximum value adding for the nation rather than a lot of individuals and corporations setting the nations wealth/value based on how much effort they can be bother to make in the short term. If a nation means anything this attitude is not good enough although it’s OK if everyone is led to believe it can’t be any other way.

    …….. “If these foreign governments are planning how they are going to feed their people in the future, surely the Australian government should also been considering this issue more seriously,” he told Crikey. “We should be selling the food, not the farm.” ……….

    We specialize in selling ‘dirt’ not metals (simply too lazy) while decades ago there was a little effort to value-add in metals.
    Having so specialized, the country (Australian Nation) has probably lost the smarts to realise the (oh so subtle) profit difference in selling the food and not the farm. (profit every year for ever VS one big deposit to the bank)
    That sort of wisdom requires organisation (government encouragement and assistance) it can’t occur in all the individual players at once when they are focused on bank balances in the short term.
    Sure the market will muddle us through and all those without the enthusiasm to have that superior vision will be able to say “see, told you, the market works” and no one will know the difference to what could have been.
    difference to what could have been.

  27. Harvey Tarvydas

    Dr Harvey M Tarvydas

    @Gavin Moodie — Posted Friday, 17 June 2011 at 7:12 am
    Even off the top of your head you certainly get the economics right for this rather different place called Oz.
    You are very right ….”… Australians haven’t saved money…” nor were they ‘share’ (equity) buyers – that other form of saving for capital needs.
    Back in the 70’s there was a ‘crazy’ Oz government that had the brilliance to know that this was in fact Australia’s main retardation for the future world and its leader with his mate ‘nugget’ Coombs (the brilliant) had a stunning and unique plan that would change this retardation and change Australia into a powerhouse of capital and investment but it never saw the light of day being too smart by far for it’s own good in a retarded community for anyone to understand it (don’t understand – never confess, just fear) and it was howled down by ‘racist’ and ‘finance’ deafening smears very successfully – see Australia is good at some things.

  28. Harvey Tarvydas

    Dr Harvey M Tarvydas

    @AR — Posted Thursday, 16 June 2011 at 8:07 pm
    That Irish blarney stands for something still it seems.

  29. Harvey Tarvydas

    Dr Harvey M Tarvydas

    To the minimalist, lazy and undeserving but lucky Aussie, greedy or self-centred citizen Nation means ‘see how good our kids are at sport’, boarders and MONEY.
    To the truly valuable Australian Nation means ‘attitude’, the most powerful human psychological space (till now mostly ignored by the science of psychology – just starting to get into it) but for decades I, Dr Harvey Psychology, psychology, psychology is everything Tarvydas have been pointing out that professions intellectual laziness.

  30. scottyea

    If, heaven forbid, it came to real poverty in Australia, the Govt could just nationalise everything anyway, so nothing to worry about hey?

  31. Sir Lunchalot

    This is a major issue. I heard Tony Windsor sold to the Chinese as well

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